Summary
Cardinal Health, Inc. reported its fiscal second quarter and first half results for the period ending December 31, 2013. The company experienced a significant revenue decline of 12% for the quarter and 9% for the six-month period, primarily driven by the expiration of its pharmaceutical distribution contract with Walgreens. Despite the revenue drop, gross margin saw a 10% increase for the quarter and 9% for the six months, attributed to acquisitions, margin rate expansion, and new customer wins. Operating earnings showed modest growth of 2% and 3% for the respective periods, bolstered by the Medical segment's performance and improved margins in the Pharmaceutical segment, though offset by increased SG&A expenses and amortization. Net earnings from continuing operations declined 9% for the quarter but increased 7% for the six months, impacted by significant discrete tax items. The company's liquidity remains strong, with cash and equivalents increasing substantially due to improved operating cash flow and working capital management following the Walgreens contract expiration. A key strategic development during the quarter was the announcement of a generic sourcing joint venture with CVS Caremark, aimed at enhancing generic pharmaceutical sourcing.
Financial Highlights
47 data points| Revenue | $22.24B |
| Cost of Revenue | $20.89B |
| Gross Profit | $1.34B |
| SG&A Expenses | $766.00M |
| Operating Income | $519.00M |
| Interest Expense | $33.00M |
| Net Income | $278.00M |
| EPS (Basic) | $0.81 |
| EPS (Diluted) | $0.80 |
| Shares Outstanding (Basic) | 342.00M |
| Shares Outstanding (Diluted) | 346.00M |
Key Highlights
- 1Revenue declined 12% year-over-year for the quarter and 9% for the six months, primarily due to the expiration of the Walgreens pharmaceutical distribution contract.
- 2Gross margin increased 10% for the quarter and 9% for the six months, driven by acquisitions, margin rate expansion, and new customer gains, partially offsetting the Walgreens contract loss.
- 3Operating earnings increased modestly by 2% for the quarter and 3% for the six months, supported by segment profit growth and margin improvements.
- 4Net earnings from continuing operations decreased 9% for the quarter but rose 7% for the six months, influenced by significant tax adjustments.
- 5The company announced a 50/50 generic sourcing joint venture with CVS Caremark, expected to be operational by July 1, 2014.
- 6Cash and equivalents increased significantly to $2.7 billion at December 31, 2013, from $1.9 billion at June 30, 2013, driven by strong operating cash flow and working capital management.
- 7The company returned capital to shareholders through dividends ($0.3025 per share for the quarter) and share repurchases ($50 million in the six-month period).